Overview

Amazon periodically runs its own discount or coupon promotions on selected third‑party listings, covering the entire price reduction itself. The seller’s payout remains based on the original list price, and referral fees are still calculated from that amount. Sellers need to understand this mechanism to protect their pricing strategy and to anticipate how it may affect visibility and profitability.

Key Points

• Discount funded by Amazon — When Amazon applies a price cut or coupon to your SKU, the discount is drawn from Amazon’s promotional budget, not from your margin. For example, a $30 lamp listed at $25 may sell for $20 under an Amazon‑funded coupon, yet you still receive the $25 price.
• Referral fees stay on the list price — Amazon computes its referral charge using the price you set in the catalog, regardless of the final sale price. In the lamp scenario, the 15 % referral fee would be based on $25, not the $20 the buyer actually pays.
• Your list price is the ceiling — Amazon never raises the price above what you have entered; the program only pushes the price lower. If you list a kitchen gadget at $40, the lowest a customer will ever see is $40, even after Amazon’s discount.
• Opt‑out is a full‑account choice — Sellers who wish to avoid any Amazon‑driven price changes must request removal from the program via Seller Support; the request applies to every SKU in the account, not on a per‑product basis.
• Impact on Buy Box and rankings — Because the effective price presented to shoppers is reduced, products often gain a higher Buy Box win rate and may climb in organic search results, driving more traffic without extra advertising spend.

How Amazon‑Funded Discounts Work

1. Selection of eligible SKUs — Amazon’s internal algorithms scan the marketplace for items that meet criteria such as sales velocity, inventory levels, and competitive pricing. For instance, a best‑selling Bluetooth speaker with excess stock may be flagged for a 10 % discount.
2. Application of the discount — Once chosen, Amazon automatically creates a coupon or price drop that appears on the product detail page. The customer sees a “Save $5” badge, while the backend price remains unchanged for the seller. In the speaker example, the list price stays at $50, but the shopper pays $45.